I have been doing a lot of research on Trading before taking the 'leap', and I have read this at so many places that "90% of traders FAIL". I have no idea about trading but I have never 'failed' at anything I have done so far, so howcome, trading can be so difficult???? Why is it so 'impossible' to achieve success at trading? I presume there is a process in place, a research, a strategy to do trading OR is it all LUCK? If it is all luck and nothing is in your hands, then ya, why won't 90% fail. Any coments would be most welcome. Thanks
Windowsill
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timsk
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Hi imranmir1,
Welcome to T2W,
In my experience, you're wrong on both counts! I'll deal with the luck issue first as it''s easier and less contentious. Luck only plays a very small part in trading. We can argue 'til the cows come home about the exact percentage - it doesn't really matter. And the reason it doesn't matter is because, over time, all traders receive their fair share of both good and bad luck. We know it only plays a small part in trading because if it were otherwise, those that make profits consistently, day in and day out, month in a and month out, wouldn't; period. Luck does not account for their ability to do this, so something else must account for their success. This then points to things like talent, skill, judgement and experience etc., which leads on to the first part of your query. It's not like learning to be an accountant, architect or doctor. All three professions take a lot of time and study and, all things being equal, students of said subjects can expect to qualify and land a good job with excellent prospects. Trading offers no such promises - let alone guarantees. Yes, there are books, courses and websites like this one but, at the end of the day, you can have an encyclopedic knowledge and understanding of the market, but that doesn't necessarily mean you can trade. I'm mindful here of a well respected member of T2W who works for a prop' firm who commented that one of his VERY successful trading colleagues didn't know what the S&P500 is! The route from where we start to eventual success is different for each and every one of us. I refer specifically to home based retail traders - my comments don't apply so much to uni' grad's getting in on the ground floor at IB's and prop firms etc. So, do you wanna join the party?
Tim.
0007
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If this is so, in my opinion you will have to jump a huge psychological hurdle when eventually you do come across failure. (I have in the past been responsible for people in this situation trying to do something as difficult as trading successfully and believe me, it hits very hard). You will need to learn to accept failure (hopefully in a small tactical way and of course there are degrees of failure....) in order to trade successfully - that's my experience anyway.
Why do 90% fail - old urban myth which may/may not, be true/accurate. I've never seen any proper evidence though no doubt it exists, and anyway: failing at what? and when? and what defines failure? - there are many facets to trading, though the Bottom Line has got to be the best indicator of success or otherwise.
There must be a million reasons why people don't trade successfully (I've tried many of them!) - you'll soon find some of them them if you start. As Windowsill's already said: concentrate on the 10% that's cracked it.
the reason that 90% fail is because their are no barriers to entry. As long as you have £200/£500 you can open a account and trade whatever you want without showing anyone you ability to trade and make a profit. If people had to pass an exam half the people opening an account would not even try the exam or pass it.
I would say alot of peope open a account to try and learn to trade instead of learning to trade before opening an account.
I would say alot of peope open a account to try and learn to trade instead of learning to trade before opening an account.
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Lord Flasheart
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The reason most fail is that by nature we are not programmed to accept loses in any form.we are all mainly creatures that have become institutionalised and have never been programmed to give away money. We only know the 9-5,savings in bank and retire at 60 etc. I had weeks when I was 90% accurate but still lost. The simplest method can reap great rewards so the failure is all down to the mind. Learn the pshycology, add in money management and finaly a method and you will succeed.
Chorlton
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If you can clearly distinguish the difference between "failing" and being "wrong" then you will be off to a very good start IMO.
We are conditioned from our early years that "winning" or "being right" reaps greater rewards than being wrong. Being wrong in some way, on the otherhand, suggests weakness and is frowned upon so we try to avoid it at whatever cost.
However, this mindset has no place in trading. One of the old sayings in the Mrkts is to cut ones losses quickly. However, to effectively achieve this one needs to accept when one is wrong, which is not an easy task when you first begin trading.....
All IMO,
Chorlton
shadowninja
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I wonder if 90% of entrepreneurs fail for that reason.
Trading2k
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The reason is that markets can be very erratic as they are controlled by emotion. Fear and greed pull and push the markets around and unless you see the signs which most experienced traders do you will get beaten up and kicked around. I have been doing this for a year and my only ambition was not to lose money in my first year which is going well. I look at this as a long learning curve that will make money in the long run one the experience comes.
I read all the comments very carefully. Thanks a lot. Your comments has made a difference in my thinking already. I am total newbie at trading, and when you have no idea what lies ahead, it is human nature, I guess, to be concerned.
One last comment. In other fields we know for sure that if one works hard, no matter what, he/she will eventually get some success but it seems trading needs much more than hardwork...Only time will tell if I have the smartness, intelligence and the aptitude to be a succesful trader. Thanks again.
One last comment. In other fields we know for sure that if one works hard, no matter what, he/she will eventually get some success but it seems trading needs much more than hardwork...Only time will tell if I have the smartness, intelligence and the aptitude to be a succesful trader. Thanks again.
Lord Flasheart
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Chorlton is so right, we jump with delight when our trades are in profit and cant wait to take a few pence only to see a pot of gold was just around the corner. Ive read somewhere that the most successful traders are only 30% accurate because they leave there trades in longer. I guess its like saying Id wish Id taken the opposite side on all of my trades and id be a millionaire. WRONG Id have taken a small profit and still lost even more
Chorlton
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I would suggest that this is highly dependant on the strategy adopted. With long-Term Trend Following type strategies a win rate of 30-40% is not uncommon but the R:R is high. In constrast, a short-term approach could offer a lower R:R but with a higher win rate.
Either approach will work as long as the overall system has a positive expectancy
InvestaMania
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In one of my Financial Market books there was a really useful line:
"the secret about trading is that there is 'No secret'"
You cant buy a magical book that will tell you how trading should be done or how you will score big bucks. The Market runs on unpredictable information, therefore it is hard to do the right thing.
Your best choice is to learn simple things such as price support and price resistance which all comes back to supply and demand. By knowing simple things like this, you are likely to get a lot better.
And dont think that "ANALYSTS" know much more than you in the business.Think about the recent write downs by the big banks...and maybe even think Merrill Lynch. Out of some 20 analyst estimates of their write downs....the one with the highest estimate was still lower than the actual write down amount...meaning they are in the same boat as you pretty much.
"the secret about trading is that there is 'No secret'"
You cant buy a magical book that will tell you how trading should be done or how you will score big bucks. The Market runs on unpredictable information, therefore it is hard to do the right thing.
Your best choice is to learn simple things such as price support and price resistance which all comes back to supply and demand. By knowing simple things like this, you are likely to get a lot better.
And dont think that "ANALYSTS" know much more than you in the business.Think about the recent write downs by the big banks...and maybe even think Merrill Lynch. Out of some 20 analyst estimates of their write downs....the one with the highest estimate was still lower than the actual write down amount...meaning they are in the same boat as you pretty much.
Lee Shepherd
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Not quite true bud, the analyst's arn't paid by us, they're paid by them. They say whatever to keep the market steady or to rock the boat, whatever they get told, thats what they report. Wether they are working from old info, incorrect info or just simply their own opinions, its all news tommorow but what happens today is what counts. The big boys at the top of the institutions still get their bumper pay outs and obscene wages for telling everyone else everything is fine and you should invest now.
And its all usually for a vote.
0007
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Just a variation on the politicians' "dodgy dossier" eh?
new_trader
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The difficult part for any newbie is working out who the 10% really are.
Trading does need much more than hard work. Patience, discipline etc etc etc etc.
However, the number one necessity is still hard work and lots of it. Put in the hard work for as long as it takes and you will be successful.
Don't be fooled by anyone suggesting you need special genes or such like.
Cheers,
PKFFW
JTrader
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I suspect the majority are trading algorythms/bots, sitting in the offices of big banks.
